Coke: A Trading Play from Rhodes

"Despite our longer-term bearish outlook, we objectively
note the emergence of very bullish bottoming patterns in many of the indices we
follow," says Richard Rhodes,
editor of the technically-inclined, trading-oriented service, The Rhodes Report. "Therefore, we
must look towards those stocks we believe shall move higher if in fact these
bullish patterns come to fruition." Here's his trading pick.

"Our choice to trade a
long position is the more prosaic Coca-Cola (KO
NYSE). The stock is showing emerging bullish technicals that are
forming on both a daily and weekly basis. KO needs no introduction, but we will
note that the stock does in fact pay a modest dividend on the order of
1.78%. From a trading perspective, we believe the risk-reward is very good, and
this position should provide upside protection at very little cost if in fact we
are wrong in our assessment.

"On a weekly basis, price action has formed major support over the past few
years at the $42.50 to $43.00 level after having declined from its
1998 high near $90. KO formed its major high in 1998, two
years before the general market. In 2000, 2001 and 2002 traders would have done well
to use this major support level to purchase shares, as each
rally has moved a minimum of 20% higher.

"Further supportive of higher prices is
the fact an 'outside reversal week' recently formed, and thus we would expect
further follow through to higher levels given the fact it occurred from major
support in conjunction with the turn higher in the 10-30 week price oscillator.
These factors are bullish, regardless of our negative fundamental outlook on
the overall market. Risk is back to the lows at $42.00. Thus, we are risking $2.50 for a
potential move back into overhead resistance between the 50-week moving average
at $50, and the 2000 highs at $62."